Digital Transformation in the Food and Beverage Industry? Where the Major Players are Headed

The disruptive potential of digital solutions

Digital transformation in the food and beverage industry has been dominating the headlines in the past two years. In an industry honed continuously by changing customer tastes and concerns and with major global competitors, players such as Nestle and Coca-Cola have enthusiastically embraced the disruptive potential of digital solutions. They are moving their current brick and mortar holdings into a future determined by the speed at which they can react and adapt.

Why do digital solutions work so well in providing flexibility and responsiveness in this sector?  By using a Digital Supply Network, (DSN), that follows products from field to factory to distributor to the customer, a tremendous amount of information can be harvested and used to optimize processes.  The DSN ensures accuracy and consistency, informs employee and customer decision making, and builds transparency.

Wal-Mart recently adopted a blockchain system that allows them to trace the origin of any of their products in seconds so that food recalls can be instant and responsive, building customer loyalty and confidence.  Now imagine this system interconnected from the producing farm all the way to the customer’s handheld device.  Not only could customers check for food safety, but they could also check for nutritional components, allergens, chemicals or materials used in growing the product, the producer, where, when and how it was shipped. For the producer, feedback from customers can help in determining crop types, amounts to meet demand, all customizing the grower’s decisions for maximum efficiency, and minimum wastage.

Knowing the customer and the changing trends influencing that customer are critical factors when optimizing decisions in the food and beverage industry.  The forecast for the impact of digital solutions on the food and beverage industry for the coming years include:

Health and Environment Conscious Consumers

Growth for healthy, organic, and ecologically sourced products will increase. Customers want to know what is in the food and drink they consume and how it was produced. Digital Supply Networks, Like Elemica, allow for tracking, accurate labeling, and transparency.

Food Safety Compliance

Not only customers will be demanding this transparency in their purchases, but FDA compliance regulations will increasingly demand supply chain quality requirements for fast and accurate tracing of products.  Even small producers will need to conform to real-time digital processes tracking ingredients, labeling, expiry dates, and nutritional content, allergens, to be taken on by large distributors who will insist on compatible systems for their digital solutions.

Big Data

With fierce global competition, companies must be able to track and forecast their customers’ shifting demands. Big data allows for forecasting, demand planning, customer preferences and operational fine-tuning.  Integrating AI and IoT devices for real-time data in production, across the supply chain, and at the consumer end will allow for predicting future demand. For many organizations planning in the food and beverage industry relies on the past year’s sales as a basis for forecasting.  Now, this technology provides the real-time information that keeps planning accurate and allows for flexible and responsive changes to trends and issues. By adapting to changing customer demand and feedback, branding is made stronger, and consumer loyalty increased.

Improved Supply Chain Processes

Digital Supply Network solutions with supply chain quality capabilities provide superior cost control to ensure product quality by the management of ingredients for consistency, and through inventory management.  Real-time information allows the manufacturer to order what is needed when, and to produce to meet demand  – no shortfalls or overproduction.  Currently, it is estimated that 25% of all food produced is wasted through either quality control problems or inaccurate demand planning.  Closing the information loop between consumer and producer, producer and distributor, and producer and supplier will increase efficiency in these areas dramatically.

Disruption in the food and beverage industry by changes in technology will continue to shape and determine the success of various players.  By adopting a Digital Supply Network solutions and harnessing the benefits of the information age, there is a way to successfully ride this coming wave of the future.